On March 17, 2009, Standard&Poor's Ratings Services lowered its ratings on Momentive Performance Inc. and its subsidiaries by two notches, including its corporate credit rating to 'CCC' from 'B-' and placed them on CreditWatch with negative implications. These rating actions reflect a near-term risk of default. They follow a sharp decline in earnings and cash flow during the fourth quarter of 2008 and management's projection of extremely weak EBITDA of $5 million to $15 million in the first quarter of 2009. The decline is due to a significant, broad-based drop in demand and production volumes across most of the company's product lines. If EBITDA does not improve, we believe Momentive could violate the senior secured leverage covenant in
